One reason college graduates and the unemployed cannot find jobs

May and June are graduation months. During this period, between 1.5 and 2.2 million students will be graduating from college with associates, bachelors, masters, and doctorate degrees.

In addition, between 6 and 8 million college age students will  be looking for summer employment.

At the same time, the politicians and news media are trying to paint a rosy picture of how the economy is improving. They cite that an average of 200,000 new jobs are being created monthly. This translates into 2.4 million new jobs per year.

But, when we compare the number of graduates who will be entering the workforce to the number of jobs being created, we find a net difference of only 200,000 to 900,000 new jobs over the year.

The problem facing young graduates is the pure size of  those graduating all at once. Of the total 1.5 to 2.2 million looking for work, only 200,000 jobs will be available in any one month. That leaves a large number who will not be employed right away. A Townhall article cites that only 16% of those graduating from college this year have already landed a job. That translates into 240,000 to 352,000 with jobs, which represents between 1 and 2 months of employment gain.

Making matters worse for the new graduates, is the fact that there is approximately 8 times more people who are currently unemployed and competing for new jobs (i.e. 10 to 12 million people).

Thus, at a time when jobs are hard to find, the new graduates only compound the unemployment situation. Using the current economic growth rate, it will take more than 10 years before everyone is absorbed into the workforce.

But, there are certain things that college graduates and others can do to improve their chances of finding a job. First, and foremost, is to consider moving to a region of the country where jobs are available. Several states where unemployment is lower than the national average are: Iowa, Minnesota, Wyoming, Kansas, Hawaii, Vermont, New Hampshire, Nebraska, South Dakota, North Dakota, Texas.

While many graduates and their parents want their sons and daughters to remain home, very often there are not too many jobs available for those with your education. However, if you are willing to move, you may find that your specialty is in need somewhere else.

Now is the time for young graduates to make the move. Think of it as travel, an adventure. As a young person, you may not be tied down with a spouse or children. Second, you have a chance to get away. Third, if it doesn't work out, you can always move back home again.

Everything’s Bigger in Texas…Except the Unemployment Rate

Best of luck and congratulations to all!


Sources:

• Poll: More Than 40 Percent of College Grads are Underemployed…
• U.S. Adds 165,000 Jobs, Unemployment Rate Dips
• How many college students graduate every year?
• Unemployment Rate Down As Americans Give Up On Work
• Real Unemployment Rate: 5.5 Million Young People Are Out of Work, in a Major Crisis For the US
• 10 states with ridiculously low unemployment
• Unemployment Rates for States (Bureau of Labor Statistics)

Unemployment History from January 2001 to November 2011 contradicts Obama's slowest job growth remarks

In his speech in Osawatomie last Tuesday, President Obama told the audience that tax cuts in early 2000 led to slow job growth:

Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class -- things like education and infrastructure, science and technology, Medicare and Social Security. (Remarks by the President on the Economy in Osawatomie, Kansas)

However, my recollection of those years is one of lower unemployment and economic prosperity for most of us in the middle class. I wasn't sure if I was correct, so I visited the Bureau of Labor Statistics and found the following graph:

Source: Labor Force Statistics from the Current Population Survey

This shows the unemployment rate from January 2001 through November 2011. As shown, the unemployment rate increased from 4.2% in January 2001 to a peak of 6.3% in June 2003. Then it declined to 4.4% in May 2007. It rose modestly to 4.8% in February 2008 when President Obama took office.

After this new administration took control, the unemployment rate more than doubled. The unemployment rate hit a peak of 10.1% in October 2009 and has since fallen to 8.6% in November 2011.

So my memory was correct. Since Congress passed the two tax cuts in 2001 and 2003, the economy picked up again. More people were employed and the job growth increased until 2008.

Reading President Obama's statement again, I realized the distortion in his words:

Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us? The slowest job growth in half a century. 

His message is misleading because it implies that the 2001 and 2003 tax cuts led directly to a period of slow job growth. This is false. As we can see, the tax cuts were followed by 5 years of job growth and lower unemployment.

It wasn't until 2008 when Obama took office that unemployment climbed and America began experiencing a 3 year period of slow and stagnant job growth.

Semantically and factually though, the President's comment is indeed truthful because:

• we are experiencing the slowest job growth in half a century, and
• it is after the 2001 and 2003 tax cuts.

However, his conclusion "And what did it get us?" is factually incorrect and misleading. To be more accurate, President Obama should have concluded:

The slowest job growth in half a century after I took office!